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Should California adopt a single payer healthcare system? How might this integrate with other federal and private health systems? And how would California workers’ comp be affected?

These are all questions that are coming to the fore as the California legislature considers SB 562 (Lara/Atkins), known as the Healthy California Act. SB passed out of the California Senate Health Committee on April 26 on a 5-2 vote and as of the time of this post is scheduled for Senate Appropriations Committee hearing on May 25 (see link to the current version of the bill and the Senate analysis at the end of this post).

SB 562 is being debated at a time of increasing uncertainty about American health policy. Although the current U.S. House plan to “repeal and replace” Obamacare with the ACHA is not likely to be adopted by the U.S. Senate, it is unclear whether there will be a “repeal and replace” plan that makes it to Trump’s desk. Meanwhile it is quite possible that the ACA will falter by design of the Trump folks if subsidies are not funded and the employee coverage mandate not enforced. And with the 2018 federal budget in play, it is unclear how deep the cuts will be to Medi-Cal and other sources of health funding.

According to one analysis by the Sacramento Bee (see link below) , California must contribute about $1.3 billion this year to support its Medi-Cal expansion. This represents 5% of the cost to cover newly covered enrollees (about 4 million people have been added as enrollees). Under current law the state share increases to 2020, when California must pay 10% of the cost. Finding that money in the state budget is a big challenge.

So with resistance to Trump driving a significant slice of the California Democratic party base to the left, a number of California legislators are considering that California “go it alone” by enacting single payer coverage. Things often start in California and sweep the country, right?

SB 562 is designed to establish “a comprehensive universal single payer health coverage and health care cost control system for benefit of all residents of the state.” An appointed executive board would govern the system, as would a public advisory commission. Both would be comprised of many stakeholders.

Payment for treatment would be on a fee for service model though other payment methods including capitated payment would be allowed. Healthy California would be empowered to negotiate drug prices with the pharma industry.

How would it be funded? The bill makes assumptions that Federal funding would continue and be integrated into the plan. As far as the financing, the bill is quite vague. It states that :

“It is the intent of the Legislature to enact legislation that would develop a revenue plan, taking into consideration anticipated federal revenue available for the program. In developing the revenue plan, it is the intent of the Legislature to consult with appropriate officials and stakeholders.”

The hurdles involved in setting up such a plan (both financial and political) are well summarized in an analysis by Brendan McCarthy, consultant to the California Senate Appropriations Committee which can be found here:

How does California workers’ comp fit into all of this? Section 1000612 (i)(3) provides that:

“The board shall develop a proposal for coverage of health care services currently covered under the workers’ compensation system, including whether and how to continue funding for those services under that system and whether and how to incorporate an element of experience rating.”

Clearly the goal would be to fold workers’ comp medical treatment into the Healthy California system, though the bill lacks any details as to how this is envisioned.

Currently many injured workers and treating physicians complain about treatment denials under the workers’ comp system of UR and IMR, although the volume and significance of those denials are disputed by the insurance industry. Perhaps some of those workers would prefer to get treatment under a system where the “doctor is king” and not challenged.

SB 562 Section 100630 provides that the Healthy California would pay for all medical care determined to be medically appropriate by the member’s health care provider.

From what I can determine, there would be no pre-authorization requirement for care, and no utilization review or utilization management tools. The legislative analysis predicts increased treatment as a result.

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About Julius Young

A Partner at Boxer & Gerson LLP, Julius has practiced worker’s compensation and social security disability law since 1979. He has represented thousands of individuals who have sustained life-changing injuries or illnesses while on the job. In every case, his goal is to secure the medical treatments his clients need.